Prices for NAND flash memory may remain sluggish through the first quarter of 2011, according to Khein Seng Pua, chairman of Phison Electronics, a memory controller IC supplier that also makes NAND flash devices. Prices are certain to drop in the first quarter of next year when chip suppliers ramp up their production using 20nm-class processes, Pua indicated.
Pua also warned that there is a downside risk to NAND flash prices later in August, due to weak retail sales of applications for consumer electronics, which consume MLC chips in large volumes. Price levels will remain sluggish in the third and fourth quarters, as order visibility remains low, Pua said.
Phison aims to maintain a 10% gross margin in 2010, amid the gloomy pricing outlook, according to Pua. Gains in inventory value allowed Phison's gross margin to reach 15% in 2009.
Phison reported net profits of NT$321 million, or NT$2.18 per share, on revenues of NT$7.52 billion for the second quarter of 2010. The EPS came below market watchers' estimates of more than NT$2.50, and was 23.5% lower than the NT$2.85 posted in the first quarter.
Phison's gross margin was 10.97% in the second quarter, compared to 10.06% in the first.
Pua said Phison intends to keep its inventory low to mitigate inventory losses arising from the recent weak NAND flash pricing. Its inventory is estimated at NT$2.9 billion at present, Pua added.
In addition, Phison expects higher shipments of its controller ICs for NAND flash devices will help grow the company's gross margin this year, according to Pua. The company is looking to ship 450 million controller ICs in 2010, almost double the 240 million units shipped last year.
Pua also revealed that Phison plans to step into production of eMMC NAND flash devices, targeting mainly China's white-box market. Pua did not disclose a specific timeframe for its entry in the segment.